Two Delaware hospitals are among 55 hospitals paying a total of $34 million to settle a Medicare fraud case.

Both Bayhealth Kent General Hospital in Dover and Bayhealth Milford Memorial Hospital in Milford are required to pay $1.11 million. The federal government announced Tuesday that 55 hospitals in 21 states are paying to settle allegations that they overcharged Medicare for a back procedure known as kyphoplasty. They say a fraudulent billing scheme was used and was first exposed by two whistle-blowers represented by Phillips and Cohen LLP.

The government so far has recovered more than 74 million from more than 100 hospitals-including the settlements announced Tuesday. The government became aware of the Medicare billing scheme as a result of a "qui tam" (whistle-blower) lawsuit filed in 2008 in federal district court in Buffalo, N.Y, by two former Kyphon employees, Craig Patrick and Chuck Bates.

The whistle-blowers alleged Kyphon, which sold the equipment and materials used to perform the procedure, persuaded hospitals to submit false claims to Medicare and other government healthcare programs by showing how much greater its revenues would be by billing kyphoplasty as an inpatient, rather than an outpatient, procedure. Inpatient care generally isn't medically necessary for routine, scheduled kyphoplasty procedures.

Kyphon was acquired later by Medtronic Spine LLC, which paid $75 million in 2008 to settle the allegations. Tuesday's settlement brings the total amount recovered from kyphoplasty-related cases to more than $149 million.